This short introduction provides you the basics of Forex trading. The foreign exchange (Forex or FX for short) is the direct access trading of different types of foreign currencies. Until recently, forex trading had been the domain of large banks, large financial institutions and extremely wealthy individuals. However, technological advancements as emergence of the internet has changed all of this and now it is also possible for small traders to take advantage of benefit of forex trading by using online accounts to trade.

The currencies of the world are on a floating exchange rate. Currency trading is the simultaneous buying of one currency and selling of another one, so the currencies always traded in pairs (for example, the Euro/US dollar, or the GB pound/ Japanese yen). The most common traded currencies, also called major currencies pairs usually used for investment purposes are Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc. They appear in the market as EUR/USD, USD/JPY, GBP/USD and USD/CHF.

No dividends are paid on currencies. You still make profits from currency trading by wisely buying and selling them at right time. The following example is the case. It is predicted that currency 1 will appreciate against currency 2 and you decide to exchange currency 2 for currency 1. Then the prediction is exact and you may make a deal in that you exchange currency 1 back to currency 2. Eventually, you make a profit from your exchanges.

The Forex market is the largest and most liquid market in the world, with trades amounting to more than USD 3 trillion every day. Therefore, it plays a significant role in the worldwide market. Dealers can perform transactions on the Forex market at major banks or Forex brokerage companies. Trading takes place directly between the two counterparts necessary to make a trade, whether over telephone or an electronic network that allows dealers to convert the currencies of the countries around the world.

This worldwide connection of trading means that the Forex market is a 24 hour market. It is active 24 hours a day. When you are wandering in the dream at night, the dealer in Europe and Japanese are trading currencies together. The Forex market never stops. It is traded

Daily currency fluctuations are usually very small. On the Forex market, movements in price are very smooth. The daily dollar volume of currencies in the currency market reaches to trillions. Hence, someone can enter and others exist positions without any problems.

Trading currency is not centered on an exchange. Trading moves from major banking centers in one country to those of another. Small speculators in the past could not join in the Forex interbank market because the large minimum transaction sizes and strict financial requirements. The principle dealers in the market are banks and sometimes extremely large speculator. It is only them able to take most advantage of the currency market’s fantastic liquidity and strong trending nature of many of the world’s primary currency exchange rates.

There have been in fact more chances for small traders to take part in the Forex market. The foreign exchange market brokers break down the large sized market interbank unit into smaller units that are suitable for small traders.

To succeed in the field of trading, you need equip yourself with right knowledge and get really ready to join in. It is not easy for those who are new to Forex to gain profits without careful preparation and thorough understanding of the market.